Market Environment Taking Toll on Participant
Contributions

June 23, 2008 (PLANSPONSOR.com) - Despite current
economic and market conditions, plan sponsors appear to be
committed to their retirement plans, but one of every five
participants is decreasing plan contributions, according to a
recent survey.

Although the significant majority of the 154
advisers surveyed by Putnam Investments said plan
participants in the plans they manage are continuing to
contribute to their 401(k) accounts, 21.1% said
participants are decreasing their contributions to their
plans.

Plan sponsors appear to be keeping their retirement
plans generally intact; 84.6% of advisers said their plan
sponsor clients are continuing to provide the matching
contributions at the current level.

Most advisers think plan sponsors’ fiduciary
concerns have increased from last year. In fact, 17.7% of
advisers reported plan sponsors’ fiduciary concerns have
increased significantly, while 58.9% said only that
concerns have increased, and 23.4% said the concerns have
stayed the same. No advisers indicated that plan
sponsors’ fiduciary concerns have decreased.

The number of advisers who choose to act as
fiduciary or co-fiduciary versus those that do not is
relatively split. According to the survey data, almost
half of advisers now act as fiduciary or co-fiduciary for
the plans they manage, and 51% do not sign as
fiduciary.

Default Fund Recommendations

Nearly all (91%) advisers primarily recommend
target-date and target-risk funds as default plan
investment options. When recommending target-date funds,
asset allocation is the most important criterion (after
performance) for about 36% of advisers. After asset
allocation, the next largest criteria were expense ratios
(17%), glide path (13%), and a track record of more than
three years (13%).